Brexit referendum

On 23rd June 2016, citizens eligible to vote in the United Kingdom voted 51.9% to 48.1% to leave the European Union. The withdrawal of a Member State is unprecedented in the history of the European Union. The legal framework for withdrawing was first set out by the Lisbon Treaty, which entered into force in 2009 (Article 50 of the Treaty on European Union); before 2009, the possibility of withdrawing from the Union was not regulated. According to the Treaty, “Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements”. [Article 50 (1) TEU]. Article 50 also regulates the official launch of the withdrawal process, according to which, “(a) A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with the State (…) It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.” [Article 50 (2) TEU]. The Withdrawal Agreement shall be concluded on behalf of the Union by the Council, after obtaining the consent of the European Parliament, and the UK Parliament must ratify it. From the date of the official announcement, there are two years for negotiations, a period that can be extended by the unanimous decision of the European Council [Article 50 (3) TEU].

The day after the referendum, in accordance with the decision of the Hungarian Government, the inter-ministerial Brexit working group was created at state secretary level involving all ministries to continuously follow and evaluate the processes related to Brexit, and to prepare and establish the official position of the Hungarian Government. The working group is coordinated by the Prime Minister’s Office. The ad hoc expert group on Brexit within the Inter-Ministerial Committee for European Coordination – led by the Prime Minister’s Office – ensures that related government tasks are carried out at the expert level, with the involvement of all ministries and covering all policy areas.

From the beginning, the Government of Hungary has respected the democratic decision of the British people; however, it profoundly regrets the outcome of the referendum, since the two countries could often count on each other in recent decades in the political life of Brussels. The Hungarian Government was one of the first to explicitly declare the need for a ‘fair Brexit’, and it has reaffirmed, in many forums, its interest in and its willingness for the EU, including Hungary, to establish the closest possible relationship with the United Kingdom in the future. The Hungarian Government set out two important national goals at the start of the negotiations: the rights of Hungarian citizens living, working and studying in the United Kingdom need to be protected, and there must be close cooperation between the EU and the UK in the areas of economy, trade and security. Hungary, together with the other Visegrád countries, has continuously advocated maintaining the unity of the EU and has supported the work of chief EU negotiator Michel Barnier, as the Hungarian national interest has been included in various EU negotiation mandates and also in the adopted text of the Withdrawal Agreement and Political Declaration. The Hungarian Embassy in London has also organised two information sessions for Hungarian citizens in April 2017 and 2018 respectively, the latter in cooperation with UK government ministries.

On 28th June 2016, a few days after the referendum, the Visegrád Four were the first EU Member States to issue a joint statement, in which they expressed their respect for the democratic decision of the British people, and stated that, during the withdrawal negotiations, particular attention needs to be paid to the circumstances of EU citizens, and the exit agreement should be developed in accordance with the principles of reciprocity and equity.

The withdrawal negotiation process

Nine months after the referendum, on the 29th of March 2017, the United Kingdom formally notified the European Council that it wished to leave the EU. The UK’s Permanent Representative Tim Barrow handed over the notification letter to President Donald Tusk in Brussels. In response to the United Kingdom’s notification, the European Council convened an extraordinary meeting on 29th of April and accepted the Brexit guidelines on the withdrawal negotiations which defined the framework for the process and set out the overall positions and principles of the EU towards the negotiations. On 22nd May, the General Affairs Council (GAC) accepted a decision, authorizing the beginning of Brexit negotiations with the United Kingdom and appointing the European Commission, in the person of Michel Barnier, as chief negotiator. The GAC also adopted the negotiation guidelines. In parallel with this, the European Parliament appointed MEP Guy Verhofstadt as their representative for Brexit.

The Council of the European Union created separate working bodies, based on Article 50 TEU, for negotiating the EU’s position during the withdrawal negotiations – Brexit Working Group, Coreper, General Affairs Council (Article 50) – in which only the remaining EU27 Member States participated. In the negotiations with the United Kingdom, chief negotiator Michel Barnier represented the common position of the EU27, and Oliver Robbins, the chief negotiator for European Union affairs for Prime Minister Theresa May and the leaders of the Department for Exiting the European Union (David Davis, Dominic Raab, and Stephen Barclay) represented the UK side.

The EU insisted on a phased approach for the negotiations, according to which progress would be needed in the first round on the most important issues (securing citizens’ rights, financial settlement, Northern Ireland/Ireland-specific issues). The guidelines accepted by the European Council in April 2017 gave guidance to the EU’s chief negotiator on the first phase of negotiations.

Sufficient progress was made in the first phase on key issues in terms of both Hungarian and EU interests:

    • as regards the rights of EU citizens living in the United Kingdom, the agreement covers all areas which are of crucial importance for Hungary, including securing the rights relating to residency, work, study, and social security benefits, and the potential for effective enforcement of law;

    • as regards the financial settlement, the UK is ready to meet all the financial obligations which arose during its entire membership;

    • as regards the question of the border between Northern Ireland and Ireland, several important principles were laid down which secure the integrity of the internal market and customs unions, and the region’s political, economic and social stability, and preserve the progress made by the Good Friday Agreement.

On the basis of Article 50 TEU, the General Affairs Council of 29th January 2018 adopted supplementary negotiating directives for the transition period. The goal of the transitional period is to ensure predictability and an unchanged legal environment for citizens and market actors after the UK’s withdrawal up until 31st December 2020. However, during this period, the UK would no longer take part in the EU’s decision-making process. A further goal of the transitional period is to provide enough time for the EU and the United Kingdom to negotiate and prepare a future (free-trade) agreement. During the transition period, EU laws would apply essentially unchanged to the United Kingdom.

At the 23rd March 2018 meeting of the European Council, the Heads of State and Government adopted the political guidelines on the future relationship between the EU and the United Kingdom. The document, which foresees a free-trade agreement, laid down several main principles: the closest possible partnership, full exemption from customs duties in the area of trade in goods, no “cherry-picking”, the indivisibility of the fundamental freedoms of the EU and the integrity of the internal market. According to the text, the future partnership would cover the areas of justice and home affairs, aviation, and foreign, security and defence policy.

The Withdrawal Agreement

The draft text of the Withdrawal Agreement was issued on 28th February 2018 by the European Commission, and – based on the previously negotiated and accepted mandates – has separate chapters on issues related to citizens, financial settlement and the transition period. The most sensitive area is the Protocol On Ireland and Northern Ireland. Following discussions with the UK Government 25th November 2018 during the extraordinary summit of EU Heads of State and Government, the Withdraw Agreement was finalized and the Political Declaration on the future relationship was adopted, both of these being in line with Hungarian interests.

Under the terms of the agreement, the rights of Hungarian (and EU) citizens living in the United Kingdom are secured, the UK will meet all its obligations towards payments into the EU’s budget up to 31st December 2020 and, in addition, the transitional period will enter into force for the same period and can be extended for up to two years if necessary.

One of the most sensitive topics of the withdrawal negotiations was the issue of the Ireland-Northern Ireland border. A customs and regulatory border must be avoided between Ireland and Northern Ireland, as it would contradict the provisions laid down in the Good Friday Agreement of 1998, which settled the situation of civil war in Northern Ireland. Under the backstop solution, if no agreement is reached on the future relationship criteria by the end of the transitional period on 31 December 2020, an integrated UK-EU customs zone would be created, as of consequence of which Northern Ireland and the rest of the UK would remain part of the customs union.